Lord Bach denied there was any effort to "punish" BAE but said the arms industry in general must "raise its game".

The report could prompt criticism of BAE and a former chief executive admitted giving unrealistically low prices at the outset of projects in order to get them commissioned.

Sir Raymond Lygo, chief executive of the firm in the 1990s, told BBC Radio
Five: "A well-known fact, whether anybody admits it or not, is you'll never get any programme through the government if you ever revealed the real cost.

"After a year you say 'I'm terribly sorry but the costs have now risen
for this reason and the other reason'."

The report also raises concerns over an average nine-month increase in forecast delays in getting equipment into service.

I am disappointed by the large rises in
costs and delays on four older projects in particular

Sir John BournNAO

The four worst performing projects highlighted by the NAO's Major Projects Report 2003 all date from the mid-1990s or
earlier and have been plagued by a history of technical problems and delays.

The most well-known is the Eurofighter Typhoon warplane. Nimrod reconnaissance planes, Astute submarines and Brimstone air-launched anti-tank missiles also ran into major problems.

Together, the report says, they account for £2.7bn or 87% of the cost overrun and 79% of the total "slippage" in delivery times.

The report studied the top 20 outstanding MoD projects where the main decision had been made to invest and proceed with the project and 10 projects still in the assessment stage.

The total current forecast for the cost of these 20 outstanding projects is £51.9bn, an increase of £3.1bn in the last year and 6% over the amount approved for spending.

Conservative MPs criticised the government for allowing costs and delivery times to slip.

Edward Leigh, chairman of the influential Commons Public Accounts Committee,
said the MoD's performance on delivering major projects was "extremely
worrying".